Whistleblowing AND Sarbanes-Oxley Research Paper

Introduction

The phenomenon of whistleblowing undoubtedly possesses a contradicting nature resting on the positions of informant and his employer. The given paper determines main characteristics of a whistleblower (both socio-psychological and legal), analyzes the instance of whistleblowing occurred at JC Penney, and assesses the protection which may be awarded to the informant.

Key Characteristics of a Whistleblower

Basing on the professional observations obtained in the course of long-term research and monitoring in the field of whistleblowing, typical and main features of a whistleblower may be classified into two groups: socio-psychological and legal. It should be reasonable to begin a consideration of social traits possessed by this category of individuals because the kind of behavior exhibited by them may at least be viewed as disloyal and unfriendly on the part of company’s management and owners (Abbasi, 2014).
Hence, a professor Bernard Luskin (2011) has emphasized several psychological and social traits belonging to a whistleblower. Among them are: 1) altruism; 2) devotion to their professional activity and high moral standards not enabling them to ignore severe breaches of rules, including legal ones; 3) fearlessness and readiness to become a subject of discrimination by an employer and even survive a loss of job and related occurrences; 4) strong faith, beliefs, and will to resort to bold actions and bring them to an end; and 5) aptitude to rethink, challenge and destroy social standards if they cannot survive a test on justice, morals, reasonableness, and consistency.
Additionally, legal provisions, especially those governing the operations of public companies, also add some characteristics to a conventional portrait of a whistleblower. Prescriptions of paragraphs 1513 and 1514A contained in 18 U.S. Code, which constitute a part of the Sarbanes-Oxley Act of 2002 (2002), give an opportunity to define a whistleblower as an individual who may be discriminated against or experience a revenge, financial losses, or dismissal due to disclosing legal or ethical breaches of any kind committed by the management, executives, or owners of the company he is working at (Cornell University Law School, n.d.).

Instance of Whistleblowing within JC Penney

Details of the Issue Reported by the Whistleblower
A serious misfortune appears to be chasing the sales business of JC Penney. In addition to a huge decrease in profits, which has been estimated to account for almost $4 billion, one of the company’s former workers named Robert Blatchford has initiated a lawsuit against this enterprise. According to publicly available sources, Robert Blatchford has been working for a few years at JC Penney’s shop located in St. Petersburg. The employee was engaged within the client department as a part-timer worker and proved to have been a witness of commercial abuses committed by the company’s sales management and executives (Reingold, 2015).
The issue is that the local shop mentioned above has overpriced its clients. The goods which were marked as items on sale turned out to have been sold out at their regular price and nontaxable goods were actually added a “sales tax”. Having found out about these tricky dealings, Blatchford reported the instance to the high management and executives who promised to settle the problem, but nothing was addressed thereafter. As a first option, Robert made up his mind to reveal the abuses at the “Today Show” in summer 2013 (Reingold, 2015).
Consequently, JC Penney’s management made an announcement that Blatchford had stolen their commercial secrets and confidential information and as a result, Robert Blatchford was dismissed and subpoenaed within a proceedings brought by the company. After some time, the company denied to pursue its claim due to clouded prospects in winning the case and Blatchford’s intentions to resort to public litigation. Subsequently, the employee followed his promise and in February 2015 he submitted the arbitration petition pursuant to the Whistleblower’s law of the Florida State. The plaintiff asserts the retaliation in the form of dismissal and seeks to vindicate credit of his name and have the company’s executives punished (Reingold, 2015).

Justification and Protection of the Whistleblower

The media sources report that the whistleblowing claim submitted by Robert Blatchford still has not been responded by JC Penney and it is also unclear whether the plaintiff will be justified upon his allegations. However, it should be stated that if the judge finds his claim inadmissible due to a lack of substantial evidence, then he will be likely to be brought to responsibility by the company for appearing with the aforementioned accusations in the program mentioned above, but this is another topic.
Turning to the Sarbanes-Oxley Act, the paragraph 1514A of 18 U.S. Code made a part of the Act provides the protection to whistleblowers against any forms of revenge taken by their employers (“publicly traded companies”). The protection is guaranteed to informants disclosing to law enforcement agencies the instances of abuses and breaches covered by sections 1341, 1343, 1344, or 1348 of 18 U.S. Code, prescriptions of the Securities and Exchange Commission, and federal rules pertaining to fraudulent actions against stakeholders (Cornell University Law School, n.d.).
At this point it should be stressed that JC Penney’s commercial abuses reported by Blatchford do not seem to be comprised by the enumeration of violations described above, however, it is for the court to decide whether Blatchford has a probable cause in his lawsuit. Under the procedure laid down, the plaintiff is entitled to the “reinstatement”, payment for forced absence, and the compensation of losses and damages incurred (Cornell University Law School, n.d.).

Conclusion

While Mr. Blatchford proves to fall under the socio-psychological characteristics of a whistleblower, it is still uncertain whether he will succeed in his case because the character of the violations reported does not appear to be covered by the prescriptions of the Sarbanes-Oxley Act, in particular by paragraph 1514A of 18 U.S. Code.

References

Abbasi, A. (2014, October 28). Whistleblowing and Sarbanes-Oxley. Retrieved from http://www.academia.edu/9600305/Whistleblowing_and_Sarbanes-Oxley_Whistleblowing_and_Sarbanes-Oxley_Key_characteristics_of_a_Whistleblower
Cornell University Law School. (n.d.). 18 U.S. Code. Retrieved from https://www.law.cornell.edu/uscode/text/18/1514A
Luskin, B. (2011). Whistleblowing is a tricky business. Retrieved from http://www.luskininternational.com/pdfs/Whistleblower%20Article%20%2010-10-11%20(1).pdf
Reingold, J. (2015, March 23). Exclusive: whistleblower files claim against JC Penney. Retrieved from http://fortune.com/2015/03/23/whistleblower-suit-jcpenney/
Sarbanes-Oxley Act of 2002. (2002, July 30). Retrieved from https://www.sec.gov/about/laws/soa2002.pdf